Twitter adopts “Poison Pill” to avoid Elon Musk takeover – The Hollywood Reporter

Twitter is taking the first steps to combat Elon Musk’s takeover attempt.

Twitter is adopting a so-called “Poison” plan, which could help protect the company from Musk buying more stock and give it time to look for alternatives. Twitter’s board of directors approved the plan Friday.

Also known as a shareholder rights plan, the action is a safeguard against takeover attempts that use discounted stock prices to dilute the holdings of new, hostile shareholders. Several entertainment companies have pursued the plan over the multi-year lease, including cinema chain Cineplex, audio giant iHeartMedia and theme park company Six Flags Entertainment. However, poisons are unusual in the tech sector, and especially for companies the size of Twitter.

The plan comes in response to Musk’s takeover offer, which was revealed on Thursday. The “limited term” plan expires in one year on April 14, 2023, and will go into effect if a shareholder buys back more than 15% of the company’s shares in a deal not approved by the board. acceptance.

“The Benefit Plan does not preclude the Board of Directors from engaging with parties or accepting a proposed acquisition if the Board believes it is in the best interest of Twitter and its shareholders,” Twitter said. in a statement.

Musk’s offer is the culmination of moves made over the past few months by the billionaire, who has quietly acquired more than 9% of Twitter shares and shared his thoughts on how Twitter should improve or change your product. The stake has become Musk’s largest outside shareholder on Twitter.

After the takeover offer was announced, Musk appeared at the TED conference in Vancouver, where he explained his vision for the company.

“Twitter has become a kind of de facto town square, so it’s really important for people to be realistic and aware that they can speak freely within the bounds of the law,” he said. said and added that he wanted an open source algorithm. “This is not a way to make money, my strong intuition is that having a fully trusted and widely inclusive public platform is extremely important for the future of civilization, I do not interested in economics at all.”

Late last week, Twitter revealed that Musk would join the board and in doing so agreed to a “keep-alive” deal that would limit his ability to buy back more than 14.9% of the company’s shares. company. On Saturday, Musk told Twitter that he had changed his mind and had no intention of joining the board.

In a message to employees on Sunday night, Twitter CEO Parag Agrawal hinted that Musk would pursue a more aggressive strategy, telling them “there will be distractions ahead, but our goals and priorities remain unchanged. The decisions we make and how we take them are in our hands, no one else’s.”

However, he added that the company will continue to be open to Musk’s input. Agrawal cited the fiduciary responsibility of board members as a possible reason Musk decided not to join the board.

In a message to Twitter board chairman Bret Taylor, Musk suggested that if the company doesn’t agree to his offer, he would consider selling his shares.

“My offer is my last and best offer and if it is not accepted, I will need to reconsider my position as a shareholder,” he wrote.

At Thursday’s TED conference, Musk said, “I’m not really sure I’ll ever be able to achieve it,” but cryptically said he has a “Plan B” if his offer is rejected. refuse.

If Twitter’s board wants to get rid of Musk’s interference, that could be the most appealing option, and the poison pill could be the tool to do so.

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